Scholastic revenue drops 8% in Q3

Revenue and operating income in the company’s Children’s Book Publishing and Distribution segment declined following big sales in the first quarter.
March 24, 2017

Scholastic Corporation’s revenue in the third quarter of fiscal 2017 is down 8% to US$336.2 million. The decline follows big sales and 48% growth in Q1 2017, due in large part to bestsellers like Harry Potter and the Cursed Child. 

Revenue in the Children’s Book Publishing and Distribution segment was down 9% to US$199 million. Lower orders and reduced sales of media titles in book clubs, as well as a significant decline in adult coloring books sales in trade, resulted in the drop. The planned reduction in book fairs held during Q3 also contributed to the decline.

Overall operating income for the Children’s Book Publishing and Distribution segment was US$6.3 million, a decline of US$1.9 million, or 23% compared to Q3 2016. These losses were partially offset by lower catalog and promotion costs in book clubs, as well as productivity improvements in book fair fulfillment operations.

Revenue in the Education segment was down 6% to US$60.1 million due to lower sales of classroom books. This loss was partially offset by higher professional development and services revenue. The Education segment’s operating income was US$3.5 million, a loss of US$1 million compared to Q3 2016.

The Q3 operating loss for the global children’s publishing, education and media company was US$23.6 million, an increase over last year’s operating loss of US$16.4 million. Increased overhead costs in the quarter are attributed to Scholastic’s investments in strategic technology systems and new enterprise applications to manage marketing and web content, e-commerce, digital applications and new financial systems.

Scholastic has affirmed its fiscal 2017 outlook for total revenue of US$1.7 to US$1.8 billion. As previously announced, the company entered into a new five-year US$375 million committed credit agreement with a syndicate of banks in place of a credit agreement that was set to expire in December of this year.

According to Scholastic, the third quarter is a lower revenue quarter in which the company typically records a loss. But book sales aren’t down across the board in the US. According to the American Booksellers Association, total retail sales at bookstores were US$1.19 billion in 2016, up 2.6% over 2015.

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